The House of Lords communications committee is to look at the regulatory changes to the ad business already under discussion or due to be implemented, from product placement to ITV’s self-proclaimed albatross, Contract Rights Renewal (CRR).
Part of the investigation will also look at “how much of the recent decline in television advertising was due to the impact of the economic recession and how much was the result of migration of advertising to the internet, and other causes”.
The news was unexpected because many in industry felt that no government body had the appetite, or the energy, to hold a thorough review of such a complicated sector right now. The UK is just emerging from recession and the after shocks of a change in government while the TV industry going through rapid change, both in terms of technology and structure.
Add to that the fact that the Competition Commission (CC), after a thorough and lengthy industry dialogue, has just ruled there will be no change to the CRR remedy imposed on ITV in 2003 and it’s no surprise many feel the dust needs to settle before more consultations and inquiries. The Conservative party did signal before the general election that it might look at CRR and the CC’s remit but it was not expected to be a priority – and there is no indication that this may have been the springboard for the review.
Unsurprisingly, media agencies and clients are less in favour of another regulatory review of CRR, as they believe ITV is in a strong position in regard to audiences and ad revenues. The broadcaster’s results are expected on Tuesday (3 August) and are expected to bolster this perception.
Chris Locke, trading director at Starcom, says: “The CC has just been through this at length and found no reason to remove CRR in the foreseeable future, as the view was ITV would leverage their undoubted power to the detriment of advertisers and the other TV channels.
“TV is in rude health in a tough market elsewhere. Ofcom and the CC look at this regularly, consulting with all interested parties, and, to date, nothing they have seen warrants any changes to CRR.
Frankly we don’t need another body looking into this – it is more than covered regularly elsewhere.”
Client body ISBA is a little more circumspect and Bob Wootton, director of media and advertising, says: “It’s the prerogative of the committee to hold their inquiry and, naturally, we will be responding. It is our hope that Isba is called to give evidence so that we can reaffirm our longstanding and well-known position on CRR. The more interesting point in this process will come after the committee’s deliberations and its recommendations are known.”“
However, some argue for a more visionary shake up of the whole traditional TV trading system that, on the one hand sees powerful broadcasters flexing their muscles during the seasonal trading sessions, while on the other hand agency buyers look to volume deals.
There is no suggestion that the committee’s review could lead to any overhaul of the trading system but Julia Jordan, UKTV joint acting CEO and executive director, business & Operations, says: “Our concern has been the recent fragmented focus by Ofcom; issues such as CRR and Airtime Sales Regulations cannot be considered in a vacuum.
“TV is a rapidly evolving medium and a complex trading market, however regulation has been grounded in historical, highly-commoditised trading models without considering how the market must necessarily evolve to support the new medium of television – defined as quality long-form AV content – delivered across multiple platforms.”
She suggest that the wider investigation must explore a “future-facing model” that appropriately supports the broadcast industry but with the ultimate benefit clearly going to consumers and advertisers alike.
There are other elements to the committee review beyond CRR that may ultimately lead to benefits to advertisers. Product placement will be a focus. The previous government introduced legislation to allow product placement but with a long list of restrictions and prohibitions. Could some of these be eased so that, for instance, a beer brand could appear in the Rover’s Return in Coronation Street?
Graham Brown, a former Aegis executive and now partner at consultant and media value company Media Sense International, says that while the reasons for the review’s timing are unclear, on balance, it is likely to lead to a better environment for clients.
“The political back-drop of this inquiry is unclear however, if it’s intention is to set place more regulation e.g. around product placement, and create higher costs for advertisers through the straightforward ’reduction or removal of the CRR, then it will be counter-productive for both marketers and the broader economy.
“If on the other-hand and as seems more likely given the economic imperatives, the outcome results in a more robust, dynamic and less regulated television marketplace (including the BBC!), with opportunity for growth at the forefront, then it is a positive initiative and should be welcomed.
The deadline for written evidence is 24 September so those with an interest in challenging the long-established status quo and building a healthy TV industry fit for marketing purposes in the next decade should start putting pen to paper.